Accountability gap in Govt proposal to protect client money
Saxo Capital Markets has welcomed the Government's proposal to enhance the protection of client money held by Australian Financial Services Licence (AFSL) holders.
However, the multi-asset trading specialist said the proposal did not outline how the new standards would be checked and enforced.
The proposed modification to the Corporations Act (sector 981D) outlined the need for tighter regulation around how client funds should and should not be used by AFSL holders offering derivatives.
Practices under review include the use of client money as working capital for proprietary trading and hedging, and the use of client money for meeting obligations from other clients.
Saxo Capital Markets Australia chief executive, Anthony Griffin, said the proposal was a positive step towards preventing the misuse of these funds by some trading companies.
"It's encouraging to see the Government pushing for greater transparency by making some very necessary updates to the Corporations Act for the better protection of consumers," Griffin said.
"While a step in the right direction, the Government proposal does not outline how these new standards will be checked and enforced which leaves an accountability gap.
"We believe the industry has an obligation to ‘walk the talk' around client money security to help restore and improve investors' general confidence in the industry."
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